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Over 13,000 multifamily rental properties have mortgages insured (or held) by the U.S. Department of Housing and Urban Development (HUD). On the one hand, these mortgages represent a major contingent Federal liability, with most of the original $34 billion insured principal still outstanding. On the other hand, these privately owned, managed, and financed properties are a major housing asset, providing homes for nearly 1.5 million families, most of whom have low incomes. This study reports on the physical and financial condition of these multifamily rental properties, with particular attention focused on the portion of these properties that are distressed. A distressed property is one whose combined physical and financial problems are severe enough to jeopardize tenant well-being, impair sound operations, and (if not corrected) lead to financial failure of the property. Distressed properties are of national concern for two reasons. First, physical or financial distress may result in poor housing for residents. Second, distress may cause owners to seek additional Federal financial assistance or to default on their mortgages. Default, in turn, results in HUD's paying insurance claims to lenders and possibly providing additional subsidies to protect affected tenants.